At almost every turn, a new restaurant opens that one has to try or a new model
of car comes out that one has to buy. Today, it’s a common occurrence for people to
live in the moment and way beyond their means; spending money instead of saving it.

According to the American Retirement
Association, one of five people who are
near retirement have no money saved. These
numbers are no surprise to Joseph P. Sarappo
of Retirement Planning Specialists–an independent
registered investment advisory firm
in Willow Grove—who says planning for
retirement is not a priority for most and
because of that, “more people are getting
to retirement age with less and less money,
and some with no money at all.”

The majority of people have no plan for
retirement. “They don’t plan to fail, they fail
to plan,” Sarappo says. “A lot of people who
reach the age of 65 will in no way be able to
retire. Many have zero to negative net worth
and they’ve been working for 30 to 40 years.
They drive nice cars, live in expensive homes
and go on extravagant vacations, but what
do they have saved for the future? Because
retirement is so far away, people can’t think
that far out.”

Today’s economy is vastly different than
it used to be. “If you go back to over 100
years ago, the United States was an agricultural-
based economy; we grew things,” he
says. “Then with the Industrial Revolution,
we became a manufacturing-based economy
where we made things. The economy
thrived when we grew and made, but in
the last few decades we’ve become a servicebased
economy which hinges on consumption.
So, the economy can only thrive if we
spend. Two thirds of the gross domestic
product (GDP) is based on consumer
spending. If a large percentage of young
people did what we’re supposed to do and
put money away, the economy would crash.
It’s completely and totally dependent
on the majority of people in this country
overspending and under saving. It’s a
double-edged sword.”

There are numerous financial
planners/advisors and so-called “financial
gurus” out there advertising products to
help you guarantee your retirement, but
Sarappo says there are no shortcuts. He
and his colleagues at Retirement Planning
Specialists view the advisor/client relationship
as a long-term partnership and focus on
each individual client’s specific needs, unlike
some in the industry who have a one-sizefits-
all mentality and place their focus on
selling products and generating commissions.

Sarappo says it’s never too early to start
planning for retirement. He and the other
advisors at his firm develop personal relationships
with each of their clients, and
thoroughly understand their life goals and investment objectives before developing a
retirement strategy. The hands-on guidance given to clients lays the foundation for an
achievable retirement plan. Sarappo admits the planning method he developed years
ago “isn’t rocket science, but a common-sense approach to investing” that can be
tangibly measured on a monthly basis to mark the progress toward each goal in the
retirement plan.

“If a client can monitor their portfolio and in a simplistic fashion see a consistently
positive progression, the chances of them seeing it through are extremely high,” he says.
“The whole idea of planning for retirement when it’s 25 to 30 years away is an abstract
concept that can be overwhelming. But if you can break it down into bite-size pieces
that people can gauge monthly, it suddenly becomes a very achievable reality.”

Expenses IncreaseSarappo says retirement isn’t simply about saving money so you can stop working at 65. There
is a lot more to consider beyond the initial value of savings after you actually retire, and that’s
not always easy, factoring in the rising prices of everything from groceries to healthcare costs.

“Once you retire and you’re living on a fixed income, you can expect your annual expenses
to increase about five percent per year. If you currently need $45,000 to cover your living
expenses, it’s reasonable to expect you’ll need $47,250 to cover those same expenses the next
year,” Sarappo explains. “For people 50 years and older, the last new car they purchased cost
significantly more than the first one they purchased because of inflation—prices continually
go up. If the cost of an item increases by a nickel from this year to next, that means the dollar
in your bank account right now will only be worth $.95 next year.”

In addition to inflation, Sarappo notes the increase in average life expectancy as another
important factor in the retirement equation.

“The other dilemma is that people are living longer,” he says. “The number of people
reaching age 90 has tripled since 1980, which means people need even more money to support
themselves in retirement. Living longer with less money is a recipe for disaster and this is
why a solid retirement plan is essential. No one wants to retire at 65 only to realize at 73 that
they need a job because they didn’t plan well enough. It’s not just getting to retirement—it’s
about being able to stay there, securely.”

Living Beneath Your MeansIn Sarappo’s experience, people live in one of three ways.

“It’s about choosing a lifestyle,” he says. “Some live above their means, which puts them in
debt. Living within their means equates to treading water, but those who choose to live beneath
their means are able to save, which can translate into a significant net worth in the future.”

He mentions an example of a Ukrainian couple who came to the United States, speaking
no English with nothing more than two suitcases and $36 between them. The husband
worked in a machine shop and the wife went to school to become a nurse, while raising two
children. They sought Sarappo’s advice early on and with his guidance, developed a solid plan
that allowed them to live comfortably, pay for their children’s education and still amass a
sizeable amount for retirement. Now, 30 years later, without the benefit of a pension, they are
preparing to retire with close to a million dollars in assets.

“Is it hard to do? Yes, but compromising earlier in life, learning the difference between
what you want versus what you need and making smart choices along the way that allow you
to save are the cornerstone of a secure retirement,” Sarappo explains.

“Many people realize that they need help in the planning process—someone to
guide them, reassure them and keep them on track. But I know there are a lot of people
out there who think it will simply be too difficult, or they fear that they waited too long
to begin. Those are the people who really need professional assistance. I’ve helped
hundreds of people throughout my career; I would love to help as many people as I can.
They need somebody to show them the options. Once they see what is possible, they
will usually say ‘yes, I’m willing to sacrifice a little today in order to benefit from it
tomorrow, but how do I do it?’ That is when it becomes crucial to seek out an advisor,
someone who can remain objective, who is committed to your long-term success, and
someone who will be there over the years to guide you through the obstacles and
celebrate with you at the finish line.”

Published (and copyrighted) in Suburban Life Magazine, May, 2017.
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